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The forest industry is a very important part of the economy of British
Columbia. A peculiarity of B.C. is the large percentage of forest land under
government control. This situation creates difficulties when trying to attract
private investment in forest management. Currently, tenure holders have no
equity in future timber and only have rights to harvest timber, therefore, there are
no voluntary incentives to invest and to manage the land well. The sale of Crown
land to private interests on a large scale is likely not acceptable to the people of
B.C. and so an alternative must be found. As the structure of the commercial
forest land in B.C. undergoes the transition from old-growth to second-growth,
the relationship between the Crown and tenure holder begins to resemble that of
landlord and tenant farmer in agriculture. A sharecropping contract may have
attributes that are desirable for managing forests. Several examples of
silvicultural regimes in both the Interior and Coastal regions of B.C. are used to
demonstrate how share contracts can be applied to B.C. forestry. The flexibility of
' share contracts allows the risks of forest management to be shared by both
parties and they also provide the incentives to perform that the current command
and control approaches do not. The calculations in the examples show positive
net present values when discounted at 4% on the Coast and 3.5% in the Interior
in real terms. Regimes that do not have positive NPVs with these discount rates
may still be viable if non-market benefits are included and the equity shares of
each party adjusted accordingly. In this way, government can internalize the
benefit to the company of producing these goods. Share contracts also allow the
Crown to accept logs as payment for use of the land and those logs could be
used to supply provincial log markets.